Leasehold - Affects me how?

Soldato
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Off to view a house later that is up for sale as "Leasehold"...
All the other houses we've seen so far are Freehold.

How does Leasehold effect me, the buyer?

Cheers.

Edit: let me be a bit more specific - we would look to buy the house as Freehold, but as it's advertised as Leasehold, how (and can) do we go about this? Ta
 
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there was an article in the paper about this.Depending on length of lease you may struggle to get mortgage if lease less than about 65 years.
Used to be 999 years but since about 80s they were becoming more frequent with 99 years.Check how long it has remaining and how much to extend lease some have quoted about £15,000

Heres the link
http://www.dailymail.co.uk/money/mo...rs-face-plunging-values-leases-time-bomb.html
 
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Agreed, theres not really much you can do about it. Generally i believe its usually Flats which are leasehold.

Doesn't affect you much other than you pay a small fee annually and as the lease gets closer to expiry you could struggle with mortgages/sales.
 
I can effect you big time if the lease is short. (I would say anything around 80 years is short) A short lease will decrease the properties value and services charge can be expensive.

Unless you talking about uber expensive in central London houses shouldn't be leasehold. You should pass on it. For a flat it unavoidable.
 
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I can effect you big time if the lease is short. (I would say anything around 80 years is short) A short lease will decrease the properties value and services charge can be expensive.

Unless you talking about uber expensive in central London houses shouldn't be leasehold. You should pass on it. For a flat it unavoidable.

Its not in central London - but on a newish estate here in South Wales.
Property value is ~£140k.

Thats what my next question was going to... why do you avoid it?
 
There may be a management company for the estate. Leasehold doesn't necessarily mean a problem, but it can limit you if you wanted to make alterations. Make sure you research and service charge if applicable. If you plan to live there long term you might have to extend the lease before selling on. You can buy freeholds, but usually it requires everyone in the building to do so, if you're on a large estate you might have to club together to buy it... Which would be difficult.
 
The length of the lease is key here really to be honest. We had a flat that we got on the cheap six years ago as it had 72 years left on the lease as part of a two flat build.
You can claim to extend the lease after living in the property for more than two years but to be honest it can become a complete nightmare! There are calculations about ground rent lost etc... over the remainder of the lease if you decide to extend that need to be included in the cost. There are websites to work out the likely cost.
We sold our flat last year and were able to extend our lease to 999 years from the original date of the build (1989) for a cost of £8000 but that was a negotiation between us and the freeholder away from any solicitors. Then we had to pay freeholder and our solicitors costs. We were lucky because we were able to make that money back on the sale on the property but I wouldn't recommend the whole thing to anyone!


If I were you I would make it clear that you are not going to buy unless the lease is a lengthy one and if it isn't make sure that they extend it because you won't be able to for a couple of years at least and in that time the cost will increase. Be aware that if you do this it can take 3 months plus chasing solicitors!
There is the option to buy the freehold as a collective (all leaseholders agree) but then you become responsible for sink funds etc... You also wouldn't be able to do this straight away.
It's also worth remembering that leasehold flats often have service charge, buildings insurance set by the freeholder (this always frustrated us as our freeholder used the same company every year and didn't care about costs going up as the two leaseholders met the cost) and ground rent.
From a mortgage point of view as others have said you will struggle to get one with a short lease.

Good luck, it worked out for us financially and we are now out of the flat but it was a huge ball ache sorting it all out and if you are faced with a short lease make sure that you research as much as you can before making an offer.
 
Most of the leasehold properties I see in my job are flats and all tend to be for about 125 years if granted this side of 2000.

If it's a new build you're pretty much guaranteed to obtain that sort of term, but as somebody else has pointed out its a bit rarer to see it on a house and for that purpose I would want to avoid a Leasehold house as well especially if you're considering it as a potential "family home" as you may want to extend the property, convert the loft etc all which will usually require a licence to alter from the Landlord as well and they may be able to, terms of the lease permitting, refuse you anyway.

Also remember that with ground rents, services charges (more common for blocks of flats) and insurance costs, if you fail to pay those and fall into arrears you're likely to have solicitors sending you letters and in extreme cases they can and will forfeit your lease and evict you. Items such as these are often subject to review at certain periods as well, for instance one lease I was looking at today had a basic ground rent of £200 (I cant remember if it was per quarter or half yearly, if it was London it was more likely to be per quarter) which then after the first 25 years doubled to £500. Services charges also subject to review at certain periods as in line with the lease and depending on what the Landlord deems necessary for repairs etc they will try to form what they deem to be a reasonable amount to cover those works. There's a lot of protection for tenants/leaseholders in that sort of situation though with the LVT publishing a fair few of its decisions on such matters. Overall It's an area full of financial hazards in my opinion and experience.

With flats, when all the leaseholders purchase the freehold it's known as collective enfranchisement.
 
You have to very very careful of service charges. Things like gym, concierge, communal gardens etc might sound nice but it can be expensive to maintain. You must find out the monthly service charges before you commit. However, if it new build you might not get the information as it might not be known until the first year of the build over.

I wouldn't buy any leasehold property until you known the service charges.
 
Lol no Macca, no sheep or coal is evolved here.

Well... It's been a good few weeks and everything is nearly coming to a close.. Would have the keys in 2 weeks hopefully!
 
Just typed a long reply, explaining how horrible it is to have a leasehold property as at any moment the management company can drop a huge bill for proposed works on you etc but sadly due to our stupid network at work it disappeared and I can't be bothered to retype it but my advice is simple...if at all possible avoid a leasehold property!!!


88 years is fine now but if you come to sell in 10 years time, 78 years will be seen as a short lease and people will definitely be put off!!!!
 
A perfect example? Hardly, he's just been unlucky.
I would imagine there's 1000's of people who've had no bother whatsoever with theirleasehold properties (houses, not flats - flats are a different matter)

Plus there's no room in "my" garden to build a house :D
 
It is a perfect example (ok maybe fairly extreme granted), of exactly what can happen, the freeholder can suddenly drop things on you like this at any time as the land is theirs!!!

You say he's just been unlucky, yes true he has but at the same time, if he had purchased a freehold property that would definitely not come up! ;)

We had similar issues in the flat we used to live in, 4 days before christmas one year we got a letter through informing us of intended works to the roof, as it was only a block of four flats and we were first floor, we didn't know if the cost would be shared with all four flats or just the two it affected, the total cost was estimated at £10,000 meaning we would have to find either £2,500 or potentially £5,000 if the work went ahead!!!

Was a hell of a shock and the timing was awful as the office was shut for xmas so we had two weeks of not knowing and stress before we could even talk to anyone about it!!!

As luck would have it the economic downturn meant such projects were shelved and it never happened but the potential being there for it is horrible!!!
 
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